A B-Plus for Bush's Defense Budget

February 27, 2002

By Stan Crock Just before the Pentagon released its budget last month, I offered a handy online reference guide for readers to help them determine whether the proposed $48 billion increase in national defense spending would be money well spent or squandered. Based on those benchmarks, I'd give the Bush Administration at least a B-plus. But the $379.3 billion defense budget for 2003 also made clear that the military's transformation will be a slow evolution, rather than a revolution.

The Defense Dept. set out an ambitious agenda for retiring older weapons to reduce the arsenal's average age, rather than just buying new stuff. Given the change in the threat and nature of warfare, mothballs are the right treatment for much of this gear. The Rumsfeld team even killed some new programs outright, including a missile-defense program that was overbudget. The department also swore off refurbishing programs for decrepit bases that may be closed in a few years. Such renovations are popular with lawmakers but are really a waste of money.

Again to Rumfeld's credit, the Pentagon didn't make big claims for potentially phony savings from outsourcing. The brass is moving forward with accounting reform so that the department can track the billions of dollars that pass through its till. And it's spending less on manned aircraft than officials would like, putting the money instead into precision weapons and unmanned aerial vehicles. For the most part, the department consistently took the right steps.

TOO FAR REMOVED. My only nit: The steps were tinier than Pentagon could have and should have taken. Top officials envision a fighting force that's light and agile, yet they're still funding some heavy weapons such as the Crusader howitzer and upgraded Abrams tanks. The admirals and generals want forces to be able to travel long distances with lots of firepower. But instead of building more bombers, which don't need access to a base near the battle theater and can carry scores of missiles, the Pentagon is plunging ahead with plans to build 3,000 fighters, many of which need nearby bases and all of which carry fewer munitions than bombers.

Sure, tankers can refuel these fighters and extend their range. But in Afghanistan, roughly 70% of the available tankers were used to refuel carrier-based Navy fighters, leaving too few free if missions arose elsewhere.

The Pentagon's new budget calls for more spending on wave-of-the-future gear such as unmanned aerial vehicles (UAVs) and precision weapons. But if it's approved by Congress, the defense blueprint allots 12 times more to fighters than bombers and UAVs, gripes Andrew Krepinevich, executive director of the Center for Strategic & Budgetary Assessments, a Washington (D.C.) think thank that specializes in defense issues.

CLASHING DEMANDS. In the near-term, none of this may matter. If Afghanistan proved anything, it was that the most important part of military transformation is giving troops the ability to adapt and be inventive. The U.S. armed forces showed they can do that superbly (see BW Online, 12/17/01, "Cooperation: A Key to Victory in Afghanistan").

In the long run, though, America's troops will need ever-improving equipment to assure victory. And in the not-too-distant future, paying for new gear may prove difficult. Pay raises and escalating health-care costs for military personnel will soon clash with the demands of weapons-production programs now in the late stages of research and development.

To its credit, the Bush Administration has shown it can and will kill programs that are too costly or no longer needed. But in the future, it will face some truly stark choices. It could reduce the number of troops, cut weapons programs, or ask for even more money. If the terrorist threat ebbs, getting more funds won't be automatic. That means the Bush team will have no option but to make the kind of really hard decisions it has been able to avoid so far. Crock covers national security and foreign affairs for BusinessWeek from Washington. Follow his views in Affairs of State twice a month, only on BusinessWeek Online